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Land reform in Brazil

A plot of our own
Jul 15th 1999 | ACARAU
From The Economist print edition


A pilot scheme that requires landless peasants in Brazil to borrow money for their own resettlement as farmers is working surprisingly well

“THE best thing about this is the liberty—being your own boss,” says Jose Osmar Munez, leader of a group of 15 families who have been farming a 157-hectare (390-acre) plot of sandy soil known as Curral Velho (Old Corral) for the past two years. The group was among the first to benefit from a pilot project to turn poor rural families into profitable farmers, which began in Acarau, a small coastal town in the north-eastern state of Ceara, in 1997. It has since been extended to four other Brazilian states, and is soon to be rolled out across the whole country.

The scheme, to be known as the Banco da Terra (Land Bank) is aimed at speeding up the settlement of Brazil’s estimated 2.5m landless peasants. Their plight may represent the country’s most pressing social problem, and one that has frequently led to confrontation, often violent, between landowners, the police and the landless. The Brazilian federal government and the World Bank are expected to sign a deal soon under which each will provide $1 billion over five years in loans and grants to around 200,000 families, in groups of up to 40, to buy land and begin farming.

Most of the families at Curral Velho and the other pilot schemes nearby used to be sharecroppers, working someone else’s land, growing what they were told to grow, and handing over half the crop as rent. Now that they are in charge, they are adding new plants such as melons to the area’s typical crops of coconuts and cashews. And they are working the land harder in response to two incentives. First, as owners of the land, the families keep all of its harvest, not half. Second, in a couple of years they will have to start paying back the money they borrowed to buy the land.

That Brazil has huge tracts of under-used land as well as so many landless rural poor is a legacy of the country’s colonial past, during which giant plantations were tended by slave labour. From independence in 1822 until the launch of President Fernando Henrique Cardoso’s real plan in 1994, there was much talk about land reform, but little action. In early 1995, the government started making large compulsory purchases of land deemed to be under-used, in order to settle groups of the landless. Between then and the end of last year, 285,000 families were settled on an area the size of the Netherlands and Switzerland combined.

The idea now is that such compulsory-purchase schemes will continue in tandem with the new World Bank project. Since the World Bank deal is still unsigned, however, and since Brazil’s recent economic troubles have led to cuts to the compulsory-purchase scheme, the political movements representing the landless—in particular the Movement of Landless Rural Workers (MST)—are angry. They have been invading fields belonging to large landowners, blocking off roads, and occupying town halls.

On July 8th, Mr Cardoso agreed to meet them face-to-face. They left his office with a promise of some extra money for this year’s budget, partly for the old compulsory-purchase scheme and partly for an extension of the Banco da Terra pilot schemes—though, in total, only 85,000 families will be settled, compared with 100,000 last year. The president also promises that, by the end of his second term of office in 2003, a further 400,000 families who have been occupying land abandoned by previous owners will be granted formal title. The future budget for the old compulsory-purchase scheme, however, and so the numbers to be settled by this method, have yet to be announced, fuelling the MST’s fears that the new Banco da Terra will simply replace, rather than supplement, the old one.

The chief difference between the two means of turning Brazil’s landless into farmers is that, under the old compulsory-purchase scheme, the government chooses the land and buys it. The landless families do not gain formal ownership until they are judged ready to support themselves, and few of them have yet done so. Under the Banco da Terra scheme, by contrast, the landless families themselves choose the land and negotiate directly with its owner to buy it. Though they have several years’ grace before payments fall due, it is made clear from the start that they have to pay back their loans.

So far, despite the MST’s claims that the scheme would end up as a bonanza for rich landowners, research by the World Bank and by the University of Campinas has found that the families seem to be striking good deals—better, in fact, than those for land purchases outside the scheme. Mr Munez relishes telling how he and the other families knocked the previous owner down from 150,000 reais ($140,000) to 95,000, and got him to accept 5,000 reais of it in coconuts. In all, the cost of settling each family, in loans, grants and administrative costs, usually works out in the north-east at 10,000 reais, or around half the amount that would be required under the compulsory-purchase scheme.

Furthermore, by devolving the running of the scheme from the federal government to state and municipal authorities, the Banco da Terra seems to get families settled quicker. All in all, says Joachim von Amsberg, an agricultural economist at the World Bank, the pilot schemes are impressive, as is the speed with which the families have begun harvesting crops for market. Will things be so rosy when the loan repayments fall due? Mr Munez thinks so, claiming that his project could be making repayments now if it had to: “We’ve got 12,000 reais in the bank and we don’t owe a cent to anyone.”








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